David Conn: York's home left at mercy of property developers

Supporters in despair as Football Association is accused of failing to apply its own rules to safeguard club stadiums

While York City's new chairman, John Batchelor, continues to generate headlines with his blue-skies thinking for football's future, the club itself is poised to lose its biggest asset. Batchelor, who promised last spring to buy the club together with its Bootham Crescent ground, when both were offered for sale by the club's former directors, in fact bought only the club, for a nominal amount.

Bootham Crescent, which sits on valuable residential land in the prosperous Minster city, is still owned by a holding company, Bootham Crescent Holdings (BCH). Its main shareholders are Barry Swallow and Colin Webb – still, remarkably, directors of the club – John Quickfall and, with 55 per cent, the principal target of York fans' indignant fury, the former chairman, Douglas Craig.

It has now emerged that these four men – and their wives, to whom 454 shares each were transferred last April – have sold 10 per cent of BCH to a housebuilder, Persimmon Homes, which has taken an option to buy the ground and applied for planning permission to build 90 homes on it. Craig would not say how much they received for the shares, but a guide was provided last January when club and ground were put up for sale for £4.5m. Local sources estimate Bootham Crescent is perhaps worth around £3.5m to a housebuilder. If this lower figure is correct, Persimmon would have paid the directors £350,000; Craig's share would have been around £220,000, the other three £32,200 each, their wives nearly £8,000 each.

Ian Hessay, Persimmon Homes Yorkshire's managing director, said the shares were taken as security for a 10 per cent deposit the company has paid to buy Bootham Crescent, which is returnable if planning permission is refused. But Craig said, as far as he was concerned, this was not the case; the money from the sale of the shares was theirs and not returnable. "It is just as if you had sold your house or shares in Marks and Spencer," he said.

This news has infuriated York City Supporters Trust, whose energetic and assured response to their club's crisis was highly commended in the Trust of the Year awards held recently by the Government-backed initiative, Supporters Direct. Richard Willis, the chairman, said: "The football club is not a piece of property like any other. The directors were entrusted with looking after the club. Instead they threatened to kill it – and are now making a killing themselves."

It is understood that previous directors ran York according to the traditional principle of custodianship, not to make a personal profit out of it. The previous chairman, Michael Sinclair, who later converted to the priesthood, is known to have passed his 123,000 shares to Craig in 1992 for less than £1 each, not for a higher amount measured according to the value of Bootham Crescent for housing. Craig said this week there was no such tradition and that Sinclair had passed him the shares for "the market price", although he would not say what the figure was. Apart from buying the shares, Craig did not have money or personal guarantees outstanding at York. He had previously loaned money but this was repaid in the late 1990s.

The York affair has highlighted starkly the Football Association's failure not only to protect its member clubs and their grounds, but even to uphold its own rules, few as they are. The FA has a rule specifically to protect football grounds from being sold for profit by people who have bought up club shares. It is quite neat, providing that if a club is wound up and goes out of existence, then when the assets are broken up and sold, the proceeds cannot be swallowed by the shareholders. Instead they must be distributed to local sporting institutions or charities.

In July 1999, Craig wrote to all York City's shareholders seeking approval to bypass this rule. He said he and his fellow directors, Webb, Quickfall and Swallow, wanted to transfer the ground and all other assets out of the club and into the holding company, BCH, free of the FA's rule. The club would be left with no assets, except membership of the FA and Football League. Craig's letter said: "Your directors are concerned that in certain circumstances these [the FA's] provisions could adversely affect the ability of the company ... to continue playing football at Bootham Crescent."

Craig and his fellow directors owned 94 per cent of the shares and the transfer duly took place. In a long interview with me this week, Craig failed to explain how the FA's rule could be interpreted as set out in his letter. The rule only applies to the distribution of assets when a club has already ceased to exist, so by definition it cannot stop that club playing at a particular ground in the future. Craig accepted that the reason for bypassing the rule was so that the shareholders could keep the money from selling the ground. "It is not acceptable in the modern era that if a club closes, its proceeds go to the FA or charity. The shareholders should have the right to the proceeds as with any business."

The FA has failed to respond meaningfully to the York scandal, which has disturbing implications for other clubs, many of whom make losses but sit on prime town centre sites. In January, I asked the FA's chief executive, Adam Crozier, Nic Coward, who is responsible for the FA's rules, and Paul Newman, the head of communications, why they maintain the rule but allow clubs to bypass it by forming holding companies. None replied. Crozier later told me he had asked Coward to reply. This week Newman did not return my call.

Richard Willis, the supporters trust's chairman, has been dismayed: "The FA have this rule, yet when it was bypassed they did nothing. They're the governing body, but seem to have no powers, no beef, no teeth."

The trust has complained to the Independent Football Commission, the new toothless body set up to improve football's "self-regulation", and it remains to be seen what difference it can make.

Craig's justification for the carve- up was that the club, like so many, was losing money because of players' wages and could not continue on its gates of around 4,000. He believed it was "immoral and unacceptable" for clubs to "welch" on creditors by going into administration. Instead, he and his associates had offered the club for sale separately, it was bought by Batchelor, and continues to play at Bootham Crescent for now. He said the holding company had been "very generous" to the club.

On the question of whether it would have served the club better for it to keep Bootham Crescent and any proceeds of sale, Craig said he did not believe the club could afford to service debts which would inevitably be incurred if the club builds a new stadium. Any money received from Bootham Crescent would therefore be worthless to it, he said. He said he did not know how much money he would ultimately make from selling the ground: "I haven't had it valued."

John Batchelor has caused some stirs in his short time in charge of the club, which he runs in conjunction with his team in the British Touring Car Championship. Because that event is covered by ITV, he said he can attract national sponsors, like B & Q in the previous two seasons, whose money will subsidise the football club until next June, when expensive player contracts inherited from Craig's regime come to an end. Persimmon has provided substantial sponsorship to the "York Sporting Club", which has been split between the touring car team and the club.

Batchelor has set out a vision to build York a new stadium, and as the club now has no ground to sell, he hopes to finance it by having a hotel on one side, a casino on the other, and have the two ends paid for in grants from the Football Stadium Improvement Fund. He promised to make good on his initial commitment to give the supporters trust two seats on the club board, and is offering them 24 per cent of the shares for £24,000, to be invested in local community projects.

Of the story that he has proposed a breakaway Football League sponsored by the Rayovac battery company, which seriously excited one Sunday newspaper last weekend, he said that his idea is that all clubs could securitise – a form of mortgage – their future gate receipts to refinance the League, and Rayovac might be a future sponsor. The idea has not met with overwhelming enthusiasm from the League.

"Here," he said, "we are trying to be positive and do the best for York City."

York fans are rallying but many remain angered by the plans of Craig, their former chairman, who is now sitting at home, at an address which is also that of his holding company, which owns and intends to sell their Bootham Crescent ground.

davidconn@independent.co.uk